I recently downloaded the new .NET 3.5 framework and VC# 2008 Express, and I noticed WPF is introduced with it. Is WPF going to be the new thing to use and WinForms will become deprecated? Or are they meant for two completely different purposes?

You have to realize WPF vs. WinForms isn't just an API change. The native windowing functionality in Windows has traditionally been derived from user32, gdi, kernel32, etc.. Now, you can switch APIs all you want, but those APIs still depend on the same core windows functionality that low level Windows API does, etc. Hence, your limitations and paradigms never change.

WPF introduces outright new windowing functionality into Windows (and users not on Vista are probably not running it by default). It partly depends on user32, but otherwise it has a new GUI model.

WPF is the new thing, but it will take a while before it really catches on. Also, legacy apps or very portable ones may be developed in WinForms or otherwise. EDIT: I realize I haven't directly answered your question. It's very hard to just deprecate something for Microsoft. What they can say is "preferred" and they want you to move to the WPF route.